The CBC reporter setting up the interview sounded vexed when I mentioned the last housing downturn.
“I don’t remember that,” he said, an hour before I turned into the radio expert on BC condo sales. Then he laughed a little. “I guess that’s because I’m young, so I wouldn’t recall it.”
How old are ya, kid, I growled.
“Thirty,” he said. Then I remembered why youth is wasted on the young.
Actually, the last crappy housing market – apart from the brief 08-09 bust – was 19 years ago. Reporterguy was watching Sesame Street and trying to pop body hair. Interest rates spiked and house prices tanked, but he wasn’t paying attention. In fact, except for little bumps like the dot-com thingy and Nine Eleven – when he was in J-school and busy hunting women – this person’s life has been sheathed in economic growth and rising house prices. It’s now a mantra. Real estate rises. It is riskless.
Well, as we discussed here yesterday, that could soon change. In the last day Libya’s idiot leader did all he could to foment civil war. Oil prices jumped close to a hundred bucks. Stock markets dumped and bonds jumped. The concern is Libyan oil production will be disrupted, then mayhem leaks into Iran or Saudi Arabia and before you know it gas is two bucks a litre. That leads to economic slowdown, rising inflation and rate increases to counter it. Family budgets get squeezed and consumer spending halts. Already inflated housing takes a hit. It could all unravel by the summer.
But what are 30-year-old reporters with wives and babies and apartments worried about? Right. How to gorge on 35-year money and buy a house before March 18th, when F’s mortgagicide takes place.
Anyway, forget him. Let God and Google care for him now.
It should be clear to everyone that the house-buying by people not paying attention – those who work at the CBC, anyone pregnant and Mainland Chinese, for example – will continue. They don’t come to this pathetic blog. They are happy. For now. But they’re also going to be part of the problem to come.
You see, the world is getting increasingly complex. Higher oil prices stand to hurt countries like China – where demand is exploding like a Lady Gaga nipple – more than in North America. They also promise way more food inflation, since growing and shipping stuff is hugely energy-consumptive. The resulting jump in consumer prices will put pressure on central banks to cool things off with a tightening of monetary policy – which means higher rates. But increasing the cost of money also hurts economic growth (by upping mortgages and downing house prices) and makes government debt a bigger burden.
Said that cute bank economist Derek Holt this week: “This is getting much more reminiscent of 2008 by the minute as an oil shock is being imposed upon fragile recoveries, only to be met by central bank talk of taking the punch bowl away.”
And he’s right. Three years ago oil hit $147 creating inflation, resulting in 7% mortgages in Canada and a fading housing market.
But this time things are more interesting. Unemployment’s far higher. People owe vast amounts. Governments are bankrupt. US housing’s sinking faster than ever. The Arabs are revolting. Families are stressed. And there is more house horniness than ever before in recorded history.
Ah yes, and the media.
The events of the coming months and years may be utterly predictable, but the news will be huge for most people. They won’t see the jump in living costs, the erosion of government services, the nipping of public pensions, the erasing of equity or the decline in their options, until there are few left. They’ll miss selling homes at the top, and reaping huge gains. They’ll walk into debt with costs that will only rise. They won’t ride oil stocks higher, grab bond gains or taste the thrill of being lasciviously liquid in time of crisis.
And now to Kelowna. AJ writes:
I wanted to share how your blog is going down here in Kelowna, BC and how (exactly as you say), the realtors have an amazing influence on the media outlets in the city, which means the unfolding real estate disaster we are experiencing here is going almost un-reported.
So the most popular news site in Kelowna is called “Castanet” . Unfortunately, Castanet seems hell-bent on pandering to its realtor advertiser wishes and playing down our city’s housing crisis. Not only do they automatically relegate any ‘house price decline’ discussions in their on-line forums to hard-to-find sub-folders they’ve now rolled out their resident Real Estate Columnist (as Coldwell Banker Realtor) to attack GARTH TURNER!!
YES! Sparked by some postings which linked to your blog in the above discussion on the forum, it seems the Kelowna realtors are getting rattled that your message is landing here in Kelowna! So, this week we saw this so called “Real Estate expert” Mark Jennings-Bates go on the defensive. First, he logged onto the forums and started his own discussion called “Kelowna Will Not Crash”, and then he re-posts it (including a swipe against Garth Turner!) on the front page in his column.
Well Garth…its good to know you’re message is getting through! We’re fighting back against the propaganda!!!
Damn, I love the smell of revolution. Saddle the camels.